Singaporeans have to shake off their ‘salaried mentality’

by Dinesh Senan: Published: The Business Times: 16 August 2003

‘IF you can’t evolve, big as you are, or prosperous as you may be, you die like the dinosaurs.’

Those are the stark terms in which Prime Minister Goh Chok Tong has defined the challenge facing Singapore – a challenge which many believe is the biggest since our separation from Malaysia.

Before examining how we might meet this challenge, let’s try and figure out how we got to where we are now.

Singapore’s economic miracle began in the 1960s, with a highly proactive ‘first-generation’ of business-minded cabinet ministers, led by Mr Lee Kuan Yew, who took the boldest economic development step then imaginable – jettisoning import substitution and inviting in multinational corporations to manufacture for export.

The initiative succeeded spectacularly, against the expectations of the conventional economic wisdom of the time. Consequently, the risky up- front investments in physical infrastructure (such as the development of industrial facilities in Jurong) to support ambitious manufacturing plans paid off handsomely. The MNCs, came in droves and in due course, established their regional HQs and other operations here. This resulted in an abundance of high-paying salaried positions for Singaporeans (relative to our lesser developed regional neighbours).

But while Singaporeans’ salaries continued to rise strongly over the following decades, this was not accompanied by a parallel rise in the wherewithal for wealth creation. While the public sector did invest heavily in developing Singapore’s ‘hard’ infrastructure – like ports, airports and gleaming buildings, in terms of its soft infrastructure – particularly, skills – Singapore remained a developing nation.

One reason for this was that as individuals, we failed to ‘invest’ our fat pay cheques into the development of our own proprietary know-how, and consequently, failed to develop our own global wealth generating capabilities.

Rather, we ‘spent’ this money on our ‘first-world’ lifestyles, sometimes quite extravagantly. For instance, we have one of the highest penetration rates of new Mercedes Benz cars sold anywhere in the world, ahead, even, of many developed nations. Yet, we pale in comparison to those nations in terms of how much ownership we have of what really creates wealth, namely intellectual property, proprietary technologies and world- renowned brand names.

In a sense, as ‘salaried’ people, we earned our money largely ‘parasitically’, on the basis of other people’s (including MNCs’) creative know-how and technology as we began to excel in providing services that supported MNCs’ growth.

We did not sufficiently appreciate that our salary-fuelled lifestyles were inherently risky, because we lacked control over the underlying wealth generating engines – namely, the know-how. Thus, we should not be surprised at how fragile our earnings turned out to be – especially after our neighbours started to wake up and better organise themselves to lure away cost-sensitive manufacturing activities by offering competitive land and labour costs.

Whether we like it or not, we must accept the fact that we grew lazy (even if subconsciously) and failed to perceive that mere salaries were not, in and of themselves, a true measure of economic success. Not when you compare the phenomenal rates of return reaped by those who own and license the underlying know-how and thereby sit at the apex of the global economic value-adding pyramid.

High salaries are good only when they follow from having first become an owner of the underlying know-how and the intellectual property that generates the wealth which allows, inter alia, the high salaries to be paid as a consequence. But otherwise, they are only temporary at best and prone to reversal.

So now that we are experiencing such reverses, we have become a nation afflicted with a four-decade-long dose of a ‘salaried mentality’. The symptoms: Constant whining and complaining about ‘unfairness’ in the treatment of employees by companies with respect to retrenchments and salary cuts; high expectations of government to create new opportunities that will magically generate revenues; and generally cultivating a ‘victim mentality’ as employees who ‘did nothing wrong, yet have to carry the can’.

But this sort of internal finger-pointing will do nothing to solve our fundamental problems. We need to realise, and come to terms with, two fundamental axioms of the world we live in today: that nobody owes us a living; and that economic well-being starts with the net value contribution of each individual in any society.

What this calls for is an inner paradigm shift at the individual level. We can’t miraculously create a highly competitive national economy without highly creative and competitive individuals. It is, after all, creative, productive people who build creative, productive enterprises that go on to build strong nations.

We would do well to ask ourselves honestly just how we have succeeded, or failed, thus far, to produce such individuals and such enterprises. So what is required of individuals in our society? As the great physicist Albert Einstein once wrote: ‘We can’t solve problems by using the same kind of thinking we used when we created them.’ We must thus see ourselves through ‘new eyes’.

For instance, we must cease drawing a false sense of security from the idea that we will be safe if only we belong to a large group – that is, if only we work for big, ‘safe’ companies that offer high salaries.

Remember Barings? Or Arthur Andersen? Or Enron? What security did the fact that these companies employed large numbers of people bring to the employees there?

Also, in the new reality, we need to constantly recreate ourselves, equipping ourselves with an ever-evolving range of relevant skills. We also need to develop a mindset aimed, from the outset, at trying to ultimately become owners of companies, owners of know-how – however small – rather than being purely salary-focused.

Whilst manufacturing MNCs have moved on to cheaper pastures and our salaried people are left whining about the dearth of economic growth opportunities for our country, the truth is that we are in an excellent position to profit from the new knowledge economy – which does not require large tracts of land, or large numbers of people.

For some of those amongst us who may presently be jobless, and are searching for a new source of income, consider this way of thinking, in parallel with your job hunting efforts: Instead of digging deeper wells, dig new ones, laterally, to create new opportunities for ourselves, by ourselves.

For example, even if all you have is an understanding of how to do business in Singapore, then perceive this as your own value-adding capability to leverage, and look across the world for emerging businesses which have yet to penetrate Singapore. Look perhaps to strong new technological, or other, entities needing new markets.

Contact them, proactively, and win them over with your knowledge of local/regional operating conditions. Then position yourself in partnership with them, and once you’ve demonstrated your true value to your partners, try to negotiate at least a fair co-ownership of the know-how for yourself. There is no shortage of such foreign entities wishing to enter new regions. The only limitation is in your own mindset and attitude towards finding and applying your individual value.

These are the sort of mindsets we find commonly in Taiwan and in the US today. We too must cultivate a similar desire to unlock our own abilities.

In the final analysis, we need to recognise that there is not much more that the public sector can really do, in responding to PM Goh’s challenge. We should not be turning to the public sector to bail us out. The public sector is competent to develop the hard infrastructure and the policy environment which help enterprises flourish. For example, the government can help build good roads, ports, airports, or provide IP protection, or tax incentives to encourage R&D or to help strike bilateral trade and other such deals with other nations. These roles it has already fulfilled very well.

Now, the fundamental issue of generating new revenues for the nation must be our job, as individuals. To remake Singapore’s economy, therefore, we primarily need to remake ourselves, individually.